With research and innovation central to the EU’s competitiveness agenda, assessing the economic returns to Horizon participation is a policy priority. This paper examines whether, when and for whom Horizon participation improves labour productivity among Italian SMEs. We link European Commission participation records with firm-level panel data (2015–2024), following 348 SMEs entering Horizon in 2020 and three alternative untreated donor pools of 6,960 firms each. Treatment effects are estimated using Matrix Completion, with robustness checks based on propensity-score matching and Difference-in-Differences. Average productivity gains range from 5.7% to 7.5% over 2021–2024, reaching 9.2–11.7% four years after programme entry (t+4, 2024). Effects are concentrated among firms with fewer than 50 employees (7.9–9.2%). Pre-treatment diagnostics identify a statistically significant widening of the treated–untreated productivity gap in 2019, consistent with anticipatory capability-building among future Horizon beneficiaries during the proposal-preparation phase. Combining effect magnitude, timing and firm-size heterogeneity across distinct donor pools and estimators, the study adds evidence on Horizon’s economic additionality. Three policy priorities emerge: assess impacts over innovation cycles rather than grant durations; reduce SME participation barriers through information, application and consortium-building support; and foster entrepreneurial ambition, innovation culture and project readiness before the application stage.

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